Monday’s need-to-know money news

Today’s top story: How to manage student loan debt without making it worse. Also in the news: How to get credit when you have none, why it may be time to stop itemizing your tax deductions, and the state most burdened by credit card debt.

How to Manage Student Loan Debt Without Making It Worse
Don’t let interest get out of hand.

How to Get Credit When You Have None
Starting from scratch.

It May Be Time to Stop Itemizing Your Tax Deductions
The standard deduction could be enough.

This state is the most burdened by credit-card debt
Is it yours?

Friday’s need-to-know money news

Today’s top story: New scoring could help credit-shy millennials. Also in the news: Giving yourself the gift of a $0 credit card balance, 5 key steps to joining the 401(k) Millionaires Club, and why you should only share your credit card info at a hotel at the front desk.

New Scoring Could Help Credit-Shy Millennials
Introducing UltraFICO.

Give Yourself the Gift of a $0 Credit Card Balance
A gift with long lasting impact.

5 Key Steps to Join the 401(k) Millionaires Club
Starting early is crucial.

Only Share Your Credit Card Info at a Hotel at the Front Desk
Protecting your info during your stay.

Q&A: Why you should keep credit use low

Dear Liz: You recently said you don’t need debt to have good credit, but I was told that “credit utilization” — the amount of credit you use compared with your credit limits — is important. Paying off the cards each month means zero balances are reported to the credit bureaus and result in no utilization. Also, older credit accounts help scores, and my older accounts dropped off after a period of time, lowering my average age of credit accounts to four years. How can I fix this? Good credit doesn’t stay on forever.

Answer: It’s not true that paying off your cards results in zero credit utilization. The balance that the card issuers report to the credit bureaus is typically the balance on your statement date. You could pay it off in full the very next day, and the statement date balance would still show up on your credit reports and get calculated into your credit scores.

That’s why it’s important to keep your credit utilization down, even if you pay in full (as you should). It’s good to keep charges below about 30% of your credit limit. Below 20% is even better, and below 10% is best.

Accounts typically won’t drop off your credit reports unless they’re closed. Even then, the closed accounts can remain on your credit reports for many years, contributing to the average age of your accounts. The key to having good scores is to keep a few accounts open and in use, not to carry debt.

Q&A: Using your home’s equity to pay off credit card debt is a dumb move

Dear Liz: My ex-husband is a self-employed carpenter who just turned 64. He’s gotten a bit over his head with his credit cards. He tried for a home equity loan since he has plenty of equity and high credit scores. His mortgage lender says he doesn’t make enough money and that he needs a co-signer.

He owes only $50,000 on the house and needs about $40,000 to pay off his bills. Why should he be punished for working hard all these years? This is crazy and stupid. Is a reverse mortgage the way to go for him?

Answer: Possibly, but it’s concerning that he has so much credit card debt. Too often people who tap their home equity to pay off debt wind up worse off in a few years. They don’t fix the problem that caused the debt in the first place, so they continue to overspend — but now they have less of a home equity cushion to fall back on in case of emergency.

That’s especially true with a reverse mortgage. These loans allow people 62 and over to borrow against their home equity without having to make payments or repay the loan until they sell, move out or die. However, any amount they borrow and don’t repay will grow over time, typically at a variable interest rate. People who use reverse mortgages to pay off debt early in retirement can wind up unable to access their equity later, when they may need it more.

The lender isn’t trying to punish your ex for working hard, by the way. It’s saying he doesn’t appear to have enough income to pay his mortgage, cover the new loan payments and take care of his other bills. Your ex may think the lender’s standards are too strict, and it’s true many lenders are more reluctant to lend to the self-employed. He may find another lender that’s more cooperative if he shops around. But that huge amount of credit card debt indicates a serious problem that needs fixing, and another loan may not be the answer.

Since your ex feels comfortable sharing financial details with you, you might suggest that he discuss his situation with a credit counselor (the National Foundation for Credit Counseling offers referrals) and with a bankruptcy attorney (the National Assn. of Consumer Bankruptcy Attorneys). Each can assess his situation and offer different potential options he could consider.

Wednesday’s need-to-know money news

Today’s top story: Employee loans as alternatives to payday loans. Also in the news: 3 savings strategies for holiday shoppers, the best Black Friday deals, and many people are still paying off last year’s holiday debt.

Short on Cash? Employee Loans Are Alternatives to Payday Loans
78% of working Americans live paycheck-to-paycheck.

Outsmart Other Holiday Shoppers With These 3 Saving Strategies
Your phone is your ally.

Best Black Friday Deals for 2018
Holiday strategies.

It’s the holidays already? Many are still paying off credit card debt racked up last year
It’s ok to use credit cards, but they need to be paid off promptly.

Q&A: One spouse’s debts might haunt the other after death

Dear Liz: I have a terminal illness and have less than a year to live. My wife and I are in our 80s and don’t own anything: no cars, no homes. My wife has an IRA worth $140,000 that pays us $2,000 a month, and she has a small pension of $1,400 a month. We receive $3,900 from Social Security, for a total monthly income of $7,200.

We have $72,000 in credit card debt that is strangling us. I told my wife that after I’m gone she should simply ignore that debt and advise creditors that I have passed away. Or should we attempt to file bankruptcy now?

Answer: Your return address shows you live in California, which is a community property state. Debts incurred during marriage are generally considered joint debts, so expecting creditors to go away after your death is not realistic.

Your wife’s retirement also could be at risk because California has limited creditor protection for IRAs. Federal law protects IRAs worth up to $1,283,025 in bankruptcy court, but outside bankruptcy, creditor protection depends on state law. In California, only amounts “necessary for support” are protected.

You really need to consult with a bankruptcy attorney to discuss your options. You can get referrals from the National Assn. of Consumer Bankruptcy Attorneys at www.nacba.org.

Monday’s need-to-know money news

Today’s top story: 6 tricks to kick credit card debt quicker. Also in the news: Why Millennials are good at saving but not investing, how to make Fed rate hikes work for you, and what Toys R Us closing means for shoppers.

6 Tricks to Kick Credit Card Debt Quicker
It doesn’t have to feel like torture.

Millennials Are Good at Saving. But Investing? Not So Much
What’s keeping Millennials away from the market.

How to Make Fed Rate Hikes Work for You
Give your savings account a boost.

What Toys ‘R’ Us closing means for shoppers
Use those gift cards ASAP.

Q&A: A husband’s death. A pile of bills. Now what?

Dear Liz: After my husband died, I was in shock and really not in my right mind for at least a year, but really more. During this time I didn’t pay attention to bills. Only the ones that were getting shut off got paid. Now I’m behind on several credit cards that I’ve had for years. I can’t keep up anymore, but I don’t know what to do.

Answer: It’s natural in your situation to be overwhelmed and not know where to start. Your first task should be determining if you can realistically pay what you owe.

If your unsecured personal debt — credit cards, medical bills, payday loans and personal loans — equals half or more of your income, then you may not be able to dig yourself out. If that’s the case, consider making appointments with a credit counselor and a bankruptcy attorney to review your options. You can get referrals from the National Foundation for Credit Counseling at www.nfcc.org or (800) 388-2227 and the National Assn. of Consumer Bankruptcy Attorneys at www.nacba.org.

Even if your debts don’t total half your income, you may find it helpful to discuss your situation with a credit counselor or an accredited financial counselor (referrals from the Assn. for Financial Counseling and Planning Education at www.afcpe.org). These counselors can review your situation and help you craft a plan to get your finances back on solid ground.

Social Security survivor benefits also can be a way to restore your financial stability, depending on your age. You can receive survivor benefits starting at age 60, or age 50 if you’re disabled, or at any age if you’re caring for your husband’s child if the child is younger than age 16 or disabled.

Applying for survivor benefits doesn’t preclude you from applying for your own retirement benefit later. You could take a widow’s benefit at 60 and then switch to your own benefit when it maxes out at age 70, if your own benefit would be larger at that point.

Thursday’s need-to-know money news

Today’s top story: 5 pieces of popular tax advice that are actually baloney. Also in the news: VW aims to plug into nostalgia with the electric bus, Social Security is underpaying thousands of widows and widowers, and 33% of Americans don’t have more savings than credit card debt.

5 Pieces of Popular Tax Advice That Are Actually Baloney
Popularity doesn’t make them true.

VW Aims to Plug Into Nostalgia With Electric Bus
We’re going back to the 60’s.

Social Security underpays thousands of widows and widowers
Claiming a larger benefit.

33% of Americans do not have more savings than credit card debt
A third of the country is in trouble.

Friday’s need-to-know money news

Today’s top story: What you can learn from the tax hike on Super Bowl players. Also in the news: 3 tactics to tame your credit card debt worries, could Bitcoin be the next legendary investment bubble, and six mistakes people make when hiring a financial advisor.

Super Bowl Players’ Tax Hike May Have a Lesson for You, Too
A look at Duty Days.

Tame Your Credit Card Debt Worries With 3 Tactics
Fight back against fear.

Is Bitcoin the Next Legendary Investment Bubble?
Crypto craziness.

Six Mistakes People Make When Hiring A Financial Advisor
What not to do.